The great parking debate; back-in or pull-in?

stocksnap_8u9imyl2cqAs another blogger puts it, an issue that has “two bitterly feuding camps” and further compares it to the “…great ‘under’ or ‘over’ toilet paper debate.” I have a feeling that the blogger is Australian so here’s a Canadian (specifically Calgary), pro / con list for back-in:

Pros:

Safety – Apparently it’s safer. So you see a lot of SUVs and trucks doing this. Because, face it, SUVs and trucks have less visibility.

You can pull out faster – Great if you’re robbing the place! Personally I like to get in the store quicker to get in front of that person who doesn’t have kids and is going to dicker in front of us while in the checkout line while my kids try to tear the place apart… (you know who you are!)

Cons:

Groceries – How do you get into your trunk with another vehicle crammed against the trunk lid?

Parking – In Calgary the parking authority can’t see your license plate to confirm if you’re legally parked (in the fancy new online parking system) – so you could get fined and even towed.

Police – In Alberta your license plate is only on the back. If you’re backed in, it looks like you’re hiding something. The police have to get out of their car when patrolling to see your license plate further upsetting them.

Winter – You can’t plug in your block heater: it is in the front of the vehicle where the engine is and the plug-in for the stall is in the front. Which reminds me – when Imperial Oil started managing the Syncrude plant they decreed “all shall back in” and one cheeky Canadian said “that will work until winter…”. Suffice it to say, the Syncrude plant actually froze up for the first time in its history and couldn’t produce for over a week proving again that warm weather people have no idea about cold weather.

Safety – People who are backing in don’t signal what they are doing for some reason? So it appears that they stop randomly and start backing up. In my car, I’ve several times nearly taken their parking space or pulled through to the parking stall they are backing into.

Stall wastage – A large enough percentage of people who back in can’t do it straight. So they usually block off the adjacent stall from being used. This also happens with people pulling-in, however back-in seems to increase the angle beyond what is just “sloppy parking”.

There you have it! In Calgary, clearly the lesser used method is back-in and a high percentage of that is trucks. I am personally a pull-in person as there are too many cons with back-in in Calgary. I have a feeling that back-in occurs much more frequently in warmer climates. Pull-in just seems the more logical way to do it here.

PS. I prefer the toilet paper in the over position. My reasoning is a result of the newer holders that flip up. Imagine banging away in the upward direction on these holders and the paper role flies off…

Bad news for Canadians: No “conflict of interest” rule planned for Canada’s financial advisors

Conflict of Interest

Let’s boil this down quickly – if you’re a Canadian and you do what everyone else does with your savings and investments you will never get ahead. As I explain why let’s look at what is happening in the USA. The USA is moving to execute a fiduciary duty on its financial advisors that includes a “conflict of interest” rule. The “conflict of interest” referred to is the fact that any financial advisor that is not fee-only receives a commission on what they advise their clients to do. In Canada, this is most advisors encountered by Canadians.

As Barrie McKenna writes, commissions put enormous pressure on the advisor to make sales volume targets and even discovers that because of this “…[j]ust to break even, investors typically must generate annual returns of 5 to 8 per cent to cover fees, commissions, trading costs and inflation…” an estimate from Victor Therrien, a mutual fund industry veteran and former executive vice-president of Brandes Investment Partners.

On a similar “conflict of interest” rule move in Canada there is silence. Indeed David Di Paolo and Kara Beitel, partners of Borden Ladner Gervais LLP counsel against it saying “A blanket imposition of a fiduciary standard would ignore the realities of many advisor-client relationships.” In their article they almost completely ignore the “conflict of interest” elephant in the room.

Consumers Union, maker of Consumer Reports magazine, has been advocating for such a rule for some time and further educates us by explaining what a Fiduciary Rule means: http://www.consumerreports.org/money/what-the-heck-is-a-fiduciary/

If you don’t want to wait for this issue to resolve in the public good’s favor, I write about a simple method to grow your investments here: https://textor.ca/2016/08/avoiding-the-doomed-retirement-feeling-how-to-correct-your-investments-in-your-favor/

Are Pensions Merely Ponzi Schemes?

As one of thPonzi-scheme-1e Canada Post unions moves to disrupt the Canadian Postal system, I think now is a great time to discuss Defined Benefit (DB) Pensions which is the main issue for the union. Most private companies have moved to a Defined Contribution (DC) system; why? DB pensions are eerily similar to Ponzi schemes moving some to call DB pensions “legalized Ponzi schemes” (where the taxpayer bails out the “last in” pensioner and the company offering the DB pension goes into bankruptcy). FiduciaryNews.com published an enlightening article on Aug 28, 2014 that dives deeper into this question:

http://www.fiduciarynews.com/2014/08/are-pensions-merely-ponzi-schemes/

What do you think? Do you think it’s fair for a small group of people’s lifestyle to be funded by the Canadian Taxpayer?

I personally do not believe this is fair, and in 1999 when I was offered the choice between DB or DC pension (the last year DB was offered at the company I worked at), I chose a DC pension. In all honesty, I would rather no pension* as I have since learned of a way to not depend on any pension system which I talk about here:

https://textor.ca/2016/08/avoiding-the-doomed-retirement-feeling-how-to-correct-your-investments-in-your-favor/

This above mentioned method is both responsible to other people (tax payers) and has the upside benefit of enabling more money to people in retirement than an equivalent DB pension (assuming the person starts the strategy when they enter the workforce and let it run for 25+ years like a DB pension would do). The method has been stress tested by people who have lived on the poverty line and still were able to use the strategy successfully.

* Pensions in the truest sense are government legislated rules to force people to save for retirement; the underlying assumption is that people are not capable of being responsible for their own future. Therefore, the government needs to step in with rules so people don’t blow their own foot off and leave the government and other people with a huge liability as people age.

Avoiding the Doomed Retirement Feeling – How to Correct Your Investments in Your Favor

You know that feeling, “I’m not saving enough. If I could only win the lottery…” That pressure we put on ourselves is unnecessary and in fact, the system is rigged against us. The financial system itself is intent first on accumulating money, second (or even third) is to make a profit for you.

Long-time investment advisor Adam O’Dell spills the beans on his former employers in an article entitled “Why I quit My job as a Financial Advisor” with “…I was expected to toe the company line and only recommend strategies and investments that were “pre-approved,”… Most of the time, that advice centered on “traditional” investment tenets: dollar-cost averaging (read: buying a little more each month), buy-and-hold (err, more like “buy-and-hope!”), asset allocation (but just long stocks and bonds). The odd thing, to me, was that our recommendations in 2008 [, a year of financial crisis,] weren’t all that different from all the years prior. The state of the market seemed to make no difference.

We spend a lot of money on advisors and money managers. The trick is that they hide the cost in a low sounding management expense ratio (MER) of typically 1-2.5%. So how much is that really? I sat down and figured it out. Because it’s a percentage, we need to consider large sums of money, since the traditional retirement strategy everyone expects is big pot of gold and then taking a few coins out each month to live on. So I started with $100,000 but a more likely figure is several million. Drumroll please!! It costs us around $400-1400/hr (or more!) to pay for these funds and the time it takes to manage the money for you. Most people think twice about paying a professional this much money. Here is a spreadsheet which you can play with yourself. Try changing the number from $100,000 to $1,000,000 or whatever suits your fancy. Click here to access the spreadsheet. This then is why the universal recommendation is to only use a fee-only financial planner. One that doesn’t make commissions or is motivated to put you in funds that charge an MER.

Further digging into the spreadsheet mentioned, it tells us why that Mutual Fund or Exchange Traded Fund (ETF) basically treads water.  Take that traditional retirement model; the big pot of gold. How many coins can we take out of it each year? Called “a safe withdrawal rate” my research indicates a reasonable amount is 2%. Remember, the fund is charging you the MER in retirement and also in situations where the fund loses money. So add the MER and the safe withdrawal rate together and you have a significant negative trend against building wealth.

There is a better way…. Something I stumbled on to. It has a significant history of success dating right back to the start of the stock exchange in 1602. Mr. Lowell Miller introduced the concept to me in his book, now a free PDF online, called “The Single Best Investment: Creating Wealth with Dividend Growth.”   (It is also on amazon if you want to pay for the e-book or buy an old paper copy.  Also, there are copies at most public libraries.)

Single Best Investment has also been called the “dividend achievers” strategy and is one of the few (only?) proven long term buy and hold strategies that work. What is it? Basically it is an investment in stocks that have raised their dividend every year. Meaning the investment is not for the dividend itself but the dividend growth rate. Click here for more on “dividend achievers”.

It works because it does two critical things:

  • eliminates financial fees
  • focuses money in companies that stay healthy with very low risk of long term downside

Because it is based on a growth rate for dividends, there is a “hockey stick” compounding growth graph. HockyStickGraphThat also means it takes time and is not a “get rich quick” (GRQ) scheme. Other characteristics of this strategy are:

  • Simple, minimal maintenance strategy
  • Focuses on key factors important to personal financial situations: cash flow, safety
  • Still grows if cash flow not reinvested
    • Cash flow increases through retirement
    • Can eliminate the need to continuously save for retirement
    • Supports “rewirement”
  • Qualifies for debt interest deductibility (an advanced tax strategy)

If you made it the bottom of this article, congratulations. You are one of the few people who cares that your money makes money. Not many people do. North American society has all sorts of funny money myths, and collectively we subconsciously do not think we deserve it. Have you ever tried to talk to a fellow North American about money? You’ll see.

So what do I do? I have documented my experience and tools to help bootstrap people. Most people tell me they “don’t have the skills to invest themselves” but most people already do tasks many times more complex than investing. To list the required skills a person needs to know how to read, multiply, divide and handle percentages.

I offer a 2 hour introductory course and pay as you go coaching for people not inclined to read the book and do-it-themselves. To date, no one has ever needed more than 3 hours total. It is that easy. The strategy requires some time to setup, but then it’s “set it and (mostly) forget it”; just like buy and hold should be. For those who do not have much seed money and want to know what tools are available to help accelerate their progress, I offer an additional advanced course. If you think investing and saving is way beyond your lifestyle, consider that people making poverty line incomes have successfully used this strategy. That’s one of the many money myths.

About my involvement as a coach: I don’t make enough money from this for it to be anything but a hobby that makes a little money. The other reason I charge is because we can’t have a contract that places the responsibility for investing on the investor without doing so. The reason I coach is because I believe it benefits people. What I don’t do is provide motivation for conducting the strategy although I do discuss the psychological hurdles as part of the course. The psychology and the motivation are the hard part and finding tools for overcoming that comes from countless motivational materials available at any book store or library.

Happy Investing,

Trevor

 

Absolution of Your Health Responsibility Kills

Think twice about handing over the responsibility for your health to the health system. They are not god; it’s a partnership where the responsibility rests solely with you. Not your doctor. Consumer Reports on Health reported in their June 2016 issue “… doctors continue to recommend treatment even when newer evidence suggests they shouldn’t. In fact, research shows that it can often take some doctors years, even decades, to give up old therapies after studies show them to be ineffective or dangerous.” Therefore, the responsibility rests with the patient to ask questions, consider second opinions, etc. And further consider that visiting a hospital puts you in great danger of dying, making hospital visits in Canada worse than the Ebola crisis by 36 times: https://textor.ca/2015/04/11-of-people-picking-up-hospital-based-infections-die/ This doesn’t mean you shouldn’t visit a hospital, but if your issue can be resolved outside a hospital it makes sense to do so.

 

Planet Money Talks About Organ Donations And How To Increase Them

Empathy is not an effective way to encourage people to be on an organ registry. But simply asking them when they are not thinking about it (via DMV registry) is extremely effective. It works because we are annoyed and distracted and not thinking about death. Interestingly, Alberta recently made this change, to ask the question at the registry, just this year.

http://www.npr.org/blogs/money/2014/02/19/279664019/episode-518-how-to-bore-someone-into-donating-an-organ